Social casinos have become increasingly popular in recent times, particularly in areas where real money online gambling is restricted.
Asia offers limited opportunities to wager online, for example, whereas only seven US states have legalized virtual casino gambling and there remain stringent restrictions on specific brands.
But are social casinos profitable, and how do they generate income? We’ll explore this in more detail in the article below.
What are Social Casinos?
At first glance, there’s very little that separates social and real money casinos. If you try live games at Casino Days and compare this with a social platform, for example, you’ll see a similar range of titles and almost identical game mechanisms.
However, social casinos enable you to play such games using a virtual currency. This will typically take the form of coins, which may be purchased directly or earned through gameplay. Coins may also be awarded as part of a social casino welcome bonus. Your virtual currency cannot be redeemed for real cash prizes.
Conversely, real money casinos require you to deposit and wager using your hard-earned cash. This introduces the concept of risk and reward that is synonymous with online gambling, while creating a primary source of revenue for operators.
Social casinos differ from sweepstakes operators too. Sweepstakes typically use a dual-currency system, comprising gold and sweepstakes coins. These can be used to enter sweepstakes with real money prizes.
How do Social Casinos Make Money?
Social casinos don’t accept real money deposits, and aren’t reliant on converting free players into regular bettors to generate revenue. However, this also requires them to seek out alternative ways of making money in order to create a profitable and sustainable business model.
Here are some ways in which social casinos generate income:
- In-app Purchases and Bundles: While social casinos will often award you free coins as part of their welcome offer, you’ll expend this currency at some point. Although you can also earn coins through gameplay, you may often fall short of what you need to support your play. So, social casinos generate income by offering in-app purchases and coin bundles, which can be purchased for real money online. This is one of the primary revenue streams for social casinos, although there is no obligation for you to make a real money purchase.
- Advertising and Sponsorship: According to Aristocrat, just over 10% of social gaming users purchase extra coins or services. The average daily spend per active user is also a little over $1. While this can be scaled over time, social casinos will also look to create additional revenue streams, including through advertising and brand sponsorships. Advertisers will typically pay for website banners and similar ad spaces through social casinos, while also engaging in affiliate marketing. More recently, we’ve also seen ads being more deeply integrated into games to create relevant and targeted opportunities for monetization.
- Hosting Challenges and Competitions: Some social casinos also host daily challenges, missions and competitions, each of which enables you to earn a predetermined number of coins. This can help to increase player engagement, while brands will often charge a nominal entry fee that enables them to participate. This revenue stream requires a minimal cash commitment from players, but it can be scaled quickly to boost profitability. In some social casino competitions, players can also win prizes that have a corporeal cash value, but the key here is that participation is completely optional.
Are Social Casinos Profitable?
In 2023, the global social casino market was valued at around $7.2 billion. It’s also projected to achieve a cumulative value of $9 billion by 2027.
At the same time, the leading 10 social casino apps currently generate over $450 million in combined revenue annually. This suggests that the marketplace is incredibly lucrative and blessed with the potential to be highly profitable.
The fact that social casinos can generate revenue through multiple channels certainly helps in this regard, and this strategy is also key to the growth and sustainability of small business brands. Social casinos can target players who have limited access to real money gambling too, enabling them to enjoy the same fun and immersive gameplay without risking their hard-earned cash.
There’s also a compelling drive to create responsible gambling experiences online, and social casinos are well-placed to meet this demand by minimizing the requirement to spend and wager real money.
